alright I was curious as a friend told me that MC didn't charge that much for a boat compared to others..So I checked it out just a little. I am not bashing the boats as they are good like others just thier pricing (raping).....

Everybody has an opion on the new MB and Tige. They are both getting bashed like the X-2 last year. So I figured lets put these companies marketing, pricing, sponsorship out there and get the most important "OPINION" of all..."OURS"

A wake, is a wake, is a wake (some like big women some like little women and well some just like them all). To each thier own but I believe that is not enough to justify an addition 10k/15k/20k+.

remember flaming me (MC owners) is not the point. I believe the boat competition is good for us customers, and that my friend is the most important thing.

Basic economics. MasterCraft (or any other boat company) does not set the price, the market does. That's you and me. No boat company can build a boat and place a random price tag on it that isn't supported by the market (that's you and me again).

If my company is able to make 10 boats and there are 10 people out there willing to pay $10,000 for each of those boats, should I price them at $8,000? Would you? I don't think so. The only question that company should be asking is if there are 10 people out there willing to pay more than $10,000 for each boat (i.e. raising their prices).

Since most inboard boat manufacturers cannot make enough boats each year to satisfy the number that their dealers want from them, that's telling you that they are actually pricing their boats below the market. Demand is higher than the supply.

So perhaps we should be thanking these boat companies that you accuse of "raping" us for keeping their prices as low as they are when there exists a good case for raising prices.

Thanks Kenny perhaps rename your self Captain Obvious. Mastercraft is more expensive & you know what? People can afford it and will & do pay it. Has their pricing kept you from buying one? Yes. Has it kept some Joe that makes $500k a year from buying one? Heck no, he wants the most expensive one he can get. Is it the smartest decision? No, but if you got the $crilla I say spend it any way you like, its yours & you don't need to feel bad for affording more expensive gear.

You said it your self "to each thier own but I believe that is not enough to justify an addition 10k/15k/20k+." Competition is good for us only goes so far. It has no bearing when you compare apples to oranges as above.

If you don't wanna get flamed then be subjective, validating your Sanger purchase by dissing others is not effective and rather comical. I love Sanger rode one Sunday & it was sick, the week before that I rode our Mastercraft, love it too both have great wakes. I understand your stoked on your boat but tell us how sick it is and stop trying to prove this over priced bit.

yes David you are correct but then again when you can find new boats on the lot for "reduced pricing to make room for the new years" then what, that to me is not selling out. Demand also would require (like the housing market) to have little on the resale market, right.. but thats not the case, there is a huge amount of boats for re-sale. Also I bring into play advertising/sponsorship as some company do none to little and some go to the max, this has a play in pricing also. MC pricing to me is overboard but I also know that they are very active in promoting our sport with tournaments (sponsoring) and such.

I just brought this to light as we all are guilty of getting the best deal,bang for the buck,etc. but what company has the biggest profit margin on each boat. How would you feel if you bought boat "A" and the company profitted 15k from you and you friend bought a similarboat "B" and that company only profitted 7k. both after the bottom line expenses. These are just examples.

look I just to see how people feel about pricing, what do you think is going to happen to the boat industry "ours" when gas hit 5-7 bucks a gallon, do you think they will still be selling as hot as they are now?

Shaun is on the right track, that is a 20k difference in pricing on the same boat???

If you really are trying to get info then maybe try giving the post a neutral title. Your pretty much asking to be capped on with what you've got. There's a difference between opinions and (semi-)constructive criticism.

because people are willing to pay that...if no one bought it for that price im sure it would drop untill it starts to pick up then the price would increase the following year... thats how business works.. but in my mind i think they are way over priced...WAY over priced!

Almost everything in the boat is a product of crude oil; plastic, synthetic rubber, vinyl, resins, windshields (acrylic or plexiglass); except for your steel and aluminum goods, engines, trailers, etc...

I know from an MC rep that '06 stung a bit. From my perspective it probably hurt the little guys even more (lower manufacturing efficiency) who all stuck to their once-a-year price adjustments to dealers. All while cost of goods sold jumped up. Let alone the increase in distribution costs of goods in and boats out.

I only know of a couple co's (CPG) that aren't having a price increase for '07. Anyone ship FedEx lately?

David...with all due respect, I think you are over simplifying the economics. What you described is a shortage (whether it is intentional or not might be debateable...does the inboard market approach an oligopoly?), in which case the price of a good is generally higher than what the market would otherwise provide. Supply and demand is a double edged sword, and markets really only set prices for the most competetive types of goods. Market structures are important to this discussion.

Clearly, Mastercraft enjoys non-price competition. They have a market position that allows them to ask more than what a functioning competetive market would allow. Personally I think this is a good thing, the last thing we want is to see our boats commoditized, but to speak of pricing as a simple supply/demand function is missing a little bit of the point.

Mastercraft is more expensive because they offer a differentiated product. If you want some of the details that Mastercraft offers, you have to pay Mastercraft prices. The pickle fork is a good example. Being first to market with a pickle fork gave MC some price making power, the copy-cats (save the stories about Brendel's pickle forks, we're talking about similar markets here) know this and work hard to take some of that distinction away and make the market *more competetive*.

As long as we benefit from unique boats and features from different manufacturers, we will have to pay the piper and accept non-competetive pricing. Don't fret, enjoy it...otherise we would all be driving nice cheap matching boats.

Kenny, no disrespect intended at all, but you are so far away from understanding how supply and demand and pricing works, that I'm not sure it can be fully explained to your satisfaction here...but I'll respond to your points and see if I can give it a shot.

If you're buying a boat based on the amount of profit that the boat maker or dealer are putting in their pockets, then your shopping methods are seriously flawed. I don't care how much money the dealer or manufacturer makes. If I look at the boat and decide that the price I can get it for is a price that I'm willing to pay and that makes me happy, then I'm going to buy it. I'm not going to cry if the dealer takes a loss on it or if the dealer makes a fortune on it. And I certainly don't care what kind of profit somebody else made when they sold my friend a boat. That's irrelevant. In my mind, I got a good deal and that's all that matters.

If you followed that kind of logic, Oakley (very high margin) would never sell another pair of sunglasses and would quickly go out of business. I don't see that happening any time soon.

Just because one MasterCraft dealer somewhere in the country has a reduced price model on the lot that they're trying to clear out to make room for the next year's models, that doesn't mean that the overall demand for their product is not exceeding the supply. I'm sure there are many dealers that buy more than they can sell and end up in that situation, but if the manufacturer can't make enough boats to satisfy all the dealers as a whole, then demand is outstripping supply. You're overthinking it.

I'm not really sure how to respond to your comment about the used boat market. Are you suggesting that if MasterCraft sells out of all their new boats every year, then all used MasterCraft should be immediately sold as well? I don't understand that.

Things like advertising are just another way for a company to increase demand and, subsequently, the price they can get for their product (providing that advertising is effective). Again, supply and demand, basic economics. You're overcomplicating the model.

Here's an example that might help. Say it costs me $8,000 to make a boat that I sell for $10,000. I only have the capacity to build 10 boats per year, but I'm selling all of them every year. Then I invent a method of of making the same boat for only $6,000, so my profit per boat doubles from $2,000 to $4,000.

In the real world, I continue to sell my boats for the price people are willing to pay, $10,000, and put the extra $2,000 in my pocket. In your world, I should reduce the price of my boats to $8,000 and give that extra profit to the buyer, despite the fact that they are perfectly happy to spend $10,000.

The prices and increases are amazing, but I don't think they will go down in the future. Around boatshow time I wanted a 24+ foot boat. I had it narrowed down to a 247 or an X45. Both have the 8.1, and similarly equipped the MC was about $10K more than the Malibu. Now the MC dealer is done selling 06 models and the 07 models are indeed about 8% more and they are holding firm on those prices. The Malibu dealer, on the other hand, doesn't even have ANY inventory and CAN'T EVEN ORDER me an 07 boat. They keep saying Malibu's system is down. I spoke with our Tige dealer today about ordering an 07 24VE and he didn't seem to think they were going to have severe price increases. Maybe a couple thousand, which equates to maybe 3%.

Nate, no disrespect intended for you either, but it sounds like you have read an economics book, but might need to give it another read. It IS extremely simple!

If you're a smart seller, you will always price your product in a way that leaves a small "shortage" in the market. That way, if conditions change (i.e. gas prices go up, competition increases, etc.), you've got some wiggle room and a little bump in demand will not leave you with a factory full of unsold boats. So in that case, yes, I am talking about a shortage and if you ask any Malibu or MasterCraft (and probably many others) dealer, they will tell you that they are not able to buy as many boats as they'd like to buy. That is, indeed, a shortage.

Non-Price Competition??? Oligopoly??? These terms have nothing to do with this conversation. Are you suggesting that the inboard boat market is not a "functioning competitive market?" I guess I'd argue with you, but I can't even understand what you must be thinking. I wouldn't know where to start.

David and dr inc said it best. Consumers set the tone. Mastercraft might put a $75,000 price tag on an X-Star because they know that somebody out there is willing to pay $75,000 for that boat. The only people that need to be blamed are the "gotta have it at any price" crowd. The yahoo that walks in and pays full msrp for a boat is killing the rest of us.

They might charge $75,000 for a 2006 (insert any brand here) in June. Offer them $62,500 and they will laugh at you. In 8 months when the boat is still there, they will jump at your $62,500 offer. And you know what? Even at $13,000 off, THEY ARE STILL MAKING A PROFIT...

$60k for a 21 foot piece of fiberglass, vinyl, carpet and gelcoat, with an engine??? We must be out of our minds...

Dave I was just trying to keep it in a simple form. A company does have the right to charge what it wants for its product and profit what it wants. Just rememeber that is what all these billion dollar CEO's are doing with their oil/gas companies cause they know we are addicted to the stuff. looking at like you say that means we should not be shocked about the gas prices and should rather be happy they didn't go up sooner and we should be prepared for 5+ bucks a gallon soon. supply and demand we need it they have and say its in short supply?

Really Dave I was was trying to keep it simple to see how every felt with the prices on some models vise others. I not in the market to buy or sell just curious about the opinions just like I stated before with everybody getting heated on the simple topic of the new MB/Tige coping MC.

Comparing a necessity like gas to a luxury like a wakeboarding boat is comparing apples to oranges. Nobody is addicted to $70,000 wakeboard boats and no boat company is making billion dollar profits (again, not that it's relevant).

Profits are relatively high. One of the main reasons is they make you purchase a new boat, in your region, from a specific dealer. They will throw a fit if you try to purchase somewhere else. The only way you can purchase the same boat, from another dealer, is if you get special permission from the manufacturer or if you buy last years model.

I saw a dealer that was dropping a boat line that normally sells in the mid 50's. He was putting two of them on ebay in the mid/high 30s for a brand new boat....

I see both sides of your argument. I tend to agree with Nate in terms of "Non-functioning competitive market." And my only intent in writing this is to offer an example of another "non-functioning competitive market."

Take Harley, You can walk in and buy a stripped Sportster for $8-$11k. No chrome, looks like a bike out of the early 90s. On the other hand, you can buy a Yamaha V-Star for $8k and -- in my subjective opinion -- have a far higher quality product, better engineering, quieter, comfortable, shaft drive, increased reliability, water-cooled, completely chromed out, etc. At last, it's not a Harley. My numbers and examples may be a little approximated. Though it exemplifies, The market that Harley owns is an example of a non-functioning competitive market.

Oddly, at the end of the day, I'd rather own a Harley. (In other words, not trying to start a bike debate and no disrespect to Harleys, or Harley owners.)

While the simple laws of supply and demand apply , I tend to side with David on this one, I would expect prices to be even higer seeing as a boat is a luxury item. And the "market" these boats are selling to, shift to a more complicacted supply/demand matrix, including other factors.

After Dave's ad-hominem attack, and an apparent lack of interest I intended to drop out of this thread. Apparently a few here do think that economics has something to do with pricing and markets, so maybe the discussion is worth continuing. At further risk of sounding like I've read an econ book (which I have, a few actually...admittedly though, not enough) here are some wiki's of what I think are relevant concepts.

I don't think it's difficult to see reasonable links to the our particular boat market.

I didn't post these to support any particular conclusion or answer...they are just tools to help explain how and why prices work. "Supply and demand" is a buzzword thrown around by people who often don't know, or aren't willing to get into the nitty gritty of P&Q. In the absence of market strucures, 'supply and demand' can be used to argue just about any position.

It's all about financing. People don't look at it as paying $70k for a boat they look at it as paying $X/month. If sales slow down because of prising, they will just up the yearly term. It takes alot longer to catch up that way because people generally aren't that bright about there money.

Boat dealers are not making a lot of money in less they own like of them the small dealers who the owner still works in everyday is not making the money. The the hugh dealers living in hugh houses that make the money. The sells staff is not making all the money . So you need to think where all that money is going if it not going to the dealer or the sales staff. Once again the Gas station owner is not making a ton of money the guy making the gas is.

Nate, I apologize for the "attack" in my post. I didn't mean for it to sound like it does now that I re-read it. That was disrespectful and I'm sorry. Seems like I was "posting angry" on a lot of threads yesterday. I should just not type when I'm really busy!

Nate: It seems like you are trying to argue that the inboard industry is operating like a cartel...I don't think you would be correct in thinking this. To me, there seems to be a LOT of price competition right now, just look at all of the different companies, and how widely the MSRP varies (regardless of whether MSRP is the "actual price of the boat, we all know that many inboard companies throw a 20% prem. on that)! However, I do think that the market price is being held at an artificially high level. But...what is new, in any market? So, I guess if you look at it that way, its...sort of...like an oligopoly?

One of the main reasons is they make you purchase a new boat, in your region, from a specific dealer. They will throw a fit if you try to purchase somewhere else. The only way you can purchase the same boat, from another dealer, is if you get special permission from the manufacturer or if you buy last years model.

Is it just me, or does this not sound like horizontal price fixing in violation of antitrust laws?

“Any combination or agreement between competitors, formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se.” United States v. Socony-Vacuum Oil Co.

It's not price fixing. The key to price fixing is the agreement between "competitors".

Boats are overpriced for what they are but it's a luxury item that most people do not need. That's why the high gas prices haven't really affected sales. So it costs an extra $20 to fill up a boat, people don't buy wake boats because they want to invest their money in them. They're toys for us to have fun with.

Also, cost of materials is up tremendously this year. Raw materials such as aluminum, brass, copper, steel, etc are up 50%+ this year. The prices will always be as high as the market will bear.

Excuse me, i did misspeak. It is a horizontal division of markets; also a per se violation of Section 1 of the Sherman Act. United States v. Topco Assoc., Inc. In a todays market, i think its pretty safe to say that two dealers in separate cities are competitors.

You are correct there must be an agreement among competitors. However, it doesnt have to be written. Conscious parallelism is the process "not in itself unlawful, by which firms in a concentrated market might in effect share monopoly power, setting their prices at aprofit-maximizing, supracompetitive level by recognizing their shared economic interests." Brooke Group Ltd. v. Brown Williamson Tobacco Corp. The leading case on conscious parallelism is iInterstate Circuit, Inc. v. United States. In this case, a large theater chain simultaneously announced to a group of film distributors that it would not deal with any distributor unless the distributor agreed not to distribute prime films to "second-run" theaters competing with the exhibitor, except on specified conditions. Each distributor, knowing that a similar proposition had been made to his competitors, accepted the exhibitor's terms. The Supreme Court affirmed the trial court's finding that there was an unlawful agreement among the distributors.

In addition to conscious parallelism, an antitrust plaintiff attempting to prove an agreement must also establish the presence of “plus factors.” The plus factors proved the basis for inferring that the parallel business conduct was the result of an agreement. Common plus factors include: Communication among the defendants,an economic motive for concerted action, defendants’ acting in contravention of their individual economic interest, simultaneous action, and radical departure from previous business practices.

I maintain my position that this type of conduct is a violation of the Sherman Act. There remains a question as to whether the Justice Dept could win, but there is definitely a case there.

Also, even though certain parallel business behavior may not be illegal under the Sherman Act, it may still constitute an “unfair method of competition” under section 5 of the FTC Act. Section 5 does NOT require any “contract, combination, or conspiracy."

Peter, I have substantiated my opinion with valid rules of law and will be happy to provide case citations if requested. I now invite you to substantiate yours with the same.

As far as your economic analysis is concerned, i agree completely. Elasticity of demand is typicallly less with luxury goods.

Derek, I think this discussion is evolving beyond the original scope of discussion, but maybe not. The term "price fixing" was thrown into the mix and I gave my opinion on it. You seem to agree with me and brought "horizontal division of markets" into the discussion. I think that is different than "price fixing" but I'm no lawyer.

My reality is when I was shopping for a boat last year, I had various Centurion, Moomba, and couple of other dealers "fighting" for my business. There were 3 dealers that I went to within a 100 mile or less radius of each other that all sold the same boat. They ALL tried to outdo one another and kept dropping the price and thowing in perks/freebies, etc. I think it's safe to say that they were NOT trying to fix prices or even trying to create or sustain a "horizonal division in the market". Once again, I'm no attorney so who knows.

Also, there does seem to be a large disparity in price between manufacturers'. I think it's safe to say that a MC is more than a Moomba boat, etc. I'm also no expert in the field of boats or boat sales so I don't know the ins and outs of this business. I don't even know the price differances between brands. Heck, I don't even know if I could have gone out of state to buy the same boat at a lower price, maybe that's the point you're trying to make. But I did go to different cities and told the dealership which dealership I just came from. Once again, this was a toy for me like so many others that buy a boat. The pricing and the boat was to my satisfaction, therefore I bought it. Boats aren't like gasoline or electricity, you know the things we NEED to live or work.

Thanks for the informative post. I'll be sure to read up on it a little further. Maybe this will inspire me to become a lawyer, just kidding.

There are three major federal antitrust laws: The Sherman Antitrust Act, the Clayton Act and the Federal Trade Commission Act.

The Sherman Antitrust Act has stood since 1890 as the principal law expressing our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for the consumers. Congress felt so strongly about this commitment that there was only one dissenting vote to the Act.

The Sherman Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate trade. This includes agreements among competitors to fix prices, rig bids and allocate consumers. The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when only one firm provides a product or service, and it has become the only supplier not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct. The Act is not violated simply when one firm's vigorous competition and lower prices take sales from its less efficient competitors; rather, that is competition working properly.

Sherman Act violations are punished as criminal felonies. The Department of Justice alone is empowered to bring criminal prosecutions under the Sherman Act. Individual violators can be fined up to $350,000 and sentenced to up to 3 years in federal prison for each offense; corporations can be fined up to $10 million for each offense. Under some circumstances, the fines can go even higher.

The Clayton Act is a civil statute (it carries no criminal penalties) that was passed in 1914 and significantly amended in 1950. The Clayton Act prohibits mergers or acquisitions that are likely to lessen competition. Under the Act, the government challenges those mergers that a careful economic analysis shows are likely to increase prices to consumers. All persons considering a merger or acquisition above a certain size must notify both the Antitrust Division and the Federal Trade Commission. The Act also prohibits certain other business practices that under certain circumstances may harm competition.

The Federal Trade Commission Act prohibits unfair methods of competition in interstate commerce, but carries no criminal penalties. It also created the Federal Trade Commission to police violations of the Act.

The Department of Justice also often uses other laws to fight illegal activities, including laws that prohibit false statements to federal agencies, perjury, obstruction of justice, conspiracies to defraud the United States and mail and wire fraud. Each of these crimes carries its own fines and imprisonment terms which may be added to the fines and imprisonment terms for antitrust law violations.

I shouldnt have jumped your case like that. You are correct, price fixing and division of markets are two different things, but they are related in the effects they cause and in how they are regulated. It was my mistake to call it price fixing. Price fixing is just what it sounds like, an agreement among competitors regarding the price they will charge. Division of markets was explained in my previous post.

They are both in the same class of anticompetitive behavior known as "horizontal" restraints" governed by Section 1 of the Sherman Act. They are also both known as "per se" violations. Per se violations are a creation of the federal courts; they aren't mentioned in the statute itself. Pretty much, a per se violation is one where if the violation has occurred, it is automatically deemed to be a violation, and there are pretty much no defenses to it. All the horizontal per se violations kind of intermingle because they all have the same purpose of preventing a collusion between two competitors which decreases competition.

You're right in that you didnt experience any violations. However, this isnt the first time i've of it by any means. It may just be that it isnt a problem in your area with the particular brands you shopped for. I've heard of such instances on this board where a dealer has outright refused to sell a boat to a non-local customer because that customer has a dealer in his area. The post i read telling about this averred that it was a policy made by the boat manufacturer. I may have assumed that it was more widespread than it really is.

I was kind of a jerk in my previous post and for that i apologize. I'm a recent law graduate currently preparing for the bar. I guess its kind of ingrained in me to get automatically defensive when my opinion is summarily dismissed with little or no given rationale.

I figured you might have been an attorney because you did raise a valid point of law when you mentioned that there must be an "agreement between competitors". A fellow attorney would have deserved the way i spoke to you, but you, as a layperson (as far as the law is concerned) did not deserve it. It was unprofessional of me and i do apologize.

On another note, just because i brought up the antitrust issue doesnt mean i agree with it. Personally, think the government should leave it alone and just let the free market sort it out.